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Bill Cracks Down on Organized Retail Crime

A bill making its way through Congress aims to crack down on criminals who sell stolen goods in large quantities on the Internet.

Introduced by Reps Brad Ellsworth (D-IN) and Jim Jordan (R-OH), the Organized Retail Crime Act of 2008, H.R. 6491, is designed to help law enforcement and retailers fight organized retail crime (ORC).

ORC involves the theft of large quantities of popular consumer products that are then resold online. Rings of thieves steal goods from stores and then bring them to remote warehouses. The merchandise is then distributed through online auction houses such as eBay and other Websites. The FBI says ORC accounts for $30 billion in retail losses annually.

If approved, the new law will require high-volume merchants (those selling $12,000 or more in merchandise annually on the Internet) to disclose their name, telephone number, e-mail address and legitimate physical address conspicuously on the Websites where they do business. Online auction houses such as eBay will be responsible for collecting this information from their high volume-sellers and posting it where the seller’s items are displayed.

Merchants who sell name brand products must also post information about where those products came from: For example, a high-volume merchant selling new Dyson vacuum cleaners must say where those appliances came from to confirm that they are not stolen.

The law will also require online auction houses to investigate the sale of stolen goods or services on their Websites at the time they become aware of such activity. Once a merchant has knowledge that stolen goods are being featured on its site, it must immediately remove or disable access to those products. Marketers must also maintain a record of all such internal investigations for a minimum of three years.

Allen Thompson, vice president for global supply chain at the Retail Industry Leaders Association, which is backing the bill, says adding ORC to the federal code will make it more difficult for organized criminals to hide behind the patchwork quilt of state law that currently applies to the trafficking of stolen goods. Most of the state and local shoplifting laws, he says, were written in the era of pawnshops and flea markets and are inadequate for fighting the growing problem of Internet crime.

“By having the requirements in terms of disclosure, we’re trying to chip away at the anonymity that these criminals have right now, when they fence online,” Thompson says.